U.S. equity futures remained flat Thursday as Treasury yields climbed to their highest levels since 2007, driven by hawkish Federal Reserve comments, elevated energy prices tied to Iran tensions, and strong economic data. The Dow is headed for its fourth consecutive losing week, while mortgage rates rose to 7.45%, the highest since 2024, potentially dampening consumer spending ahead of midterm elections.
Philadelphia Federal Reserve president Anna Paulson said Thursday that further interest rate hikes may be needed to combat stubbornly elevated underlying inflation, despite earlier favoring a pause. Other Fed officials including New York Fed president John Williams and Fed governor Michael Barr have similarly indicated additional rate increases could be warranted, with markets now pricing in over 60% odds of a second hike in October.